Uno In Quality Business Hotel vs. Commercial Tax Officer

Held

The Court allowed the petition in part and quashed the Adjudication Order dated 30.01.2023 and the Summary of Order dated 23.04.2024. The proceedings were restored to the respondent with an opportunity for the petitioner to file a response to the Show Cause Notice dated 07.10.2022. The Court reasoned that while the petitioner's GST registration was cancelled due to business closure, and the notice was purportedly served, the circumstances surrounding the closure and the petitioner's relocation meant that the authorities could not definitively state the petitioner had notice of the orders. The Court also opined that the petitioner's representative, due to business closure and potential availability of ITC from the previous year, might not have anticipated proceedings. The Court found it uncontested that the petitioner had ITC available for the previous financial year, which was claimed in the next financial year, and this needed verification. The petitioner was directed to file its response by 16.11.2026, substantiating its claim of availing ITC from the previous year and its entitlement to such exemption.

Facts

The petitioner, UNO IN QUALITY BUSINESS HOTEL, a proprietorship concern, filed a writ petition challenging an Adjudication Order dated 30.01.2023 and a Summary of Order dated 23.04.2024, both issued by the Commercial Tax Officer under Section 73 of the CGST Act. These orders demanded tax, interest, and penalty for the financial year 2017-18 due to alleged excess availment of Input Tax Credit (ITC). The petitioner had sought cancellation of its GST registration due to business closure, which was granted on 18.01.2022. The petitioner claimed it did not receive the Intimation in Form GST DRC-01A dated 16.07.2022 and the Show Cause Notice dated 07.10.2022. While the respondent claimed the notice was served, the petitioner asserted that its representatives, due to business closure, did not check the portal for notices. The order was dated 30.01.2023, with the summary uploaded on 23.04.2024.

Key Issues

1. Whether the Adjudication Order and Summary of Order demanding tax, interest, and penalty under Section 73 of the CGST Act for the financial year 2017-18 are liable to be quashed, considering the petitioner's assertion of not receiving the Show Cause Notice and the circumstances of business closure. Petitioner's arguments: The petitioner contended that it did not receive the Show Cause Notice and that its representatives, having closed the business, did not have occasion to check the portal for uploaded notices or orders. Furthermore, the petitioner argued that it had ITC relevant to the financial year 2017-18 in its Electronic Credit Ledger, which it was entitled to avail for the next financial year, and the allegation of excess ITC based on the difference between GSTR-2A and GSTR-3B overlooked this fact. Revenue's arguments: The respondent placed on record a postal endorsement indicating that the petitioner's representative had received the notice but had not responded. The respondent also stated that the order was sent to the registered address but was returned with an endorsement that the firm was no longer at that address.